A Small RWD sedan is not condsidered by BMW in the long term as they need to protect the 3er and its large fleet market share, something that projections show that the Audi A3 Sedan and Mercedes CLA could eat into the C-Klasse and A4 respectively especially in the highly contested fleet market where the larger cars are more profitable. But the desire of such small sedan-Coupe concepts has not gone unnoticed. Especially for markets like the US and China.

I am pleased to see BMW is acknowledging the need for a sub-3 Series sedan. It may very well be that the upcoming Audi and Mercedes products in this segment will eat into their bread and butter sedan sales as you say, however, in the US at least, I could easily see the lost volume for the A4 and C more than offset by the sales of the smaller cars. The A3 sedan in particular appears to be set for a very successful career. There is so much potential there. When you consider Mini sold almost 60k vehicles in the US last year, there is a clearly huge market for small luxury FWD cars. While Audi's A3 hatchback has not resonated too loudly with consumers in the US, an A3 sedan surely will.

Either of the potential ideas you mention for BMW's approach would seem to be step in the right direction, although as an enthusiast I admit I would really only be interested in a RWD model.